Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction following the modest pullback seen in the previous session.

Traders may be reluctant to make significant moves as they await additional news on debt ceiling negotiations after talks broke down last Friday.

President Joe Biden and House Speaker Kevin McCarthy, R-Calif., are reportedly due to hold talks on raising the debt ceiling later in the day.

A lack of major U.S. economic data may also keep some traders on the sidelines ahead of the release of some key data in the coming days.

The Commerce Department’s report on personal income and spending is likely to be in focus, as it includes a reading on inflation said to be preferred by the Federal Reserve.

The minutes of the Fed’s latest monetary policy meeting are also likely to attract attention, as traders look for additional clues on the outlook for interest rates.

After an early move to the upside, stocks moved mostly lower over the course of the trading session on Friday. The major averages pulled back off their early highs and into negative territory after moving sharply higher over the two previous sessions.

The Nasdaq and the S&P 500 reached nine-month intraday highs in early trading but ended the day in the red. The Nasdaq dipped 30.94 points or 0.2 percent to 12,657.90 and the S&P 500 edged down 6.07 points or 0.1 percent to 4,191.98, while the Dow fell 109.28 points or 0.3 percent to 33,426.63.

Despite the modest pullback on the day, the major averages all moved higher for the week. The Nasdaq surged by 3.0 percent, the S&P 500 jumped by 1.7 percent and the Dow rose by 0.4 percent.

The downturn on Wall Street came as Republican negotiators walked out of a meeting over raising the U.S. debt ceiling, offsetting recent optimism about an impending deal.

“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not gonna sit here and talk to ourselves,” Rep. Garret Graves, R-La., told reporters.

Graves, who is House Speaker Kevin McCarthy’s, R-Calif., lead negotiator on the debt limit, added, “We’ve decided to press pause, because it’s just not productive.”

Even with the U.S. potentially facing default as soon as June 1st, Graves said he did not know if talks would resume this weekend.

The latest developments come after McCarthy and President Joe Biden had both recently expressed optimism about reaching an agreement.

Selling pressure remained relatively subdued, however, as traders still expect lawmakers to eventually reach a debt ceiling deal.

Comments from Federal Reserve Chair Jerome Powell reinforcing expectations the central bank will leave interest rates unchanged next month also helped limit the downside.

Citing recent turmoil in the banking sector, Powell suggested interest rates “may not need to rise as much as it would have otherwise to achieve our goals.”

However, Powell noted inflation remains too high and stressed the Fed would be “steadfast” in pursuit of its goal of bringing inflation down to its 2 percent target.

Airline stocks moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 1.8 percent. The index pulled back further off the two-month closing high set on Wednesday.

Significant weakness also emerged among housing stocks, with the Philadelphia Housing Sector Index falling by 1.4 percent after reaching its best intraday level in well over a year in early trading.

Retail stocks also moved to the downside as the day progressed, resulting in a 1.3 percent drop by the Dow Jones U.S. Retail Index.

On the other hand, biotechnology stocks turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 1.1 percent.

Other Markets

Commodity, Currency Markets

Crude oil futures are inching up $0.05 to $71.60 a barrel after slipping $0.31 to $71.55 a barrel last Friday. Meanwhile, after jumping $21.80 to $1,981.60 an ounce in the previous session, gold futures are falling $5.10 to $1,976.50 an ounce.

On the currency front, the U.S. dollar is trading at 138.24 yen versus the 137.98 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0825 compared to last Friday’s $1.0805.

Asia

Asian shares ended Monday’s session mostly higher, with U.S. debt-ceiling discussions, dovish comments from Fed Chair Jerome Powell and Sino-American ties in focus.

U.S. lawmakers will continue with negotiations today to increase the country’s debt limit and avert a crisis until after the 2024 presidential election.

The dollar edged lower and bond yields dipped after Powell said on Friday it is still unclear if U.S. interest rates will need to rise further.

U.S. President Joe Biden told reporters at the G7 summit in Japan on Sunday that he expects there to soon be improvements in the U.S.-China relationship.

Chinese shares eked out modest gains after Biden said he expected ties with China to improve “very shortly.”

The benchmark Shanghai Composite Index rose 0.4 percent to 3,296.47, while Hong Kong’s Hang Seng Index jumped 1.2 percent to 19,678.17.

Japanese shares rose for an eighth consecutive session and the yen weakened after dovish comments by BOJ Governor Kazuo.

Investors shrugged off data showing that Japan’s core machinery orders fell in March for a second straight month.

The Nikkei 225 Index rallied 0.9 percent to 31,086.82, marking its highest close since July 1990 and the longest winning streak since April 2023. The broader Topix settled 0.7 percent higher at 2,175.90.

Tokio Marine Holdings jumped 5.7 percent after announcing a share buyback. Peer MS&AD Insurance advanced 1.7 percent.

Seoul stocks gained for a sixth straight session on hopes for a U.S. debt ceiling deal. The Kospi edged up 0.8 percent to 2,557.08 on foreign and institutional buying. Leading battery maker LG Energy Solution rose 1.5 percent and steelmaker Posco Holdings added 1.2 percent.

Australian markets ended a tad lower, with financials and gold miners leading losses. Payments terminal firm Tyro Payments slumped 16.6 percent after private equity firm Potential Capital abandoned takeover talks with the company.

Tech stocks surged, with accounting software provider Xero rising 1.4 percent.

The benchmark S&P/ASX 200 Index dipped 0.2 percent to 7,263.30, while the broader All Ordinaries Index closed 0.3 percent lower at 7,450.70.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slumped 0.9 percent to 11,993.

Europe

European stocks are flat to slightly lower on Monday as investors await a pivotal meeting between U.S. President Joe Biden and House Speaker Kevin McCarthy on the debt ceiling and monitored political developments in Greece.

Greek Prime Minister Kyriakos Mitsotakis won the national election but failed to reach the majority.

U.S. Treasury Secretary Janet Yellen has reiterated that the June 1 deadline for raising the federal debt ceiling is non-negotiable.

As negotiations continue, some lawmakers remain optimistic that a deal will be reached before the deadline.

While the U.K.’s FTSE 100 Index is nearly unchanged, the French CAC 40 Index and the German DAX Index are both down by 0.4 percent.

Electrolux has moved to the downside after announcing its collaboration with global freight booking platform Freightos.

Tech stocks are mixed after China banned some sales of Micron Technology products, citing significant network security risks.

Novo Nordisk A/S has jumped after research showed taking its new obesity drug may help reduce the risk of heart disease as well as boost weight loss.

NatWest has risen after it agreed to buy 1.3 billion pounds ($1.6 billion) worth of its shares back from the government.

Animal health specialist Dechra has plunged after issuing a profit warning. Sartorius AG has also tumbled after Morgan Stanley downgraded the stock to “equal-weight”, citing destocking risk.

U.S. Economic Reports

Richmond Federal Reserve President Thomas Barkin and Atlanta Federal Reserve President Raphael Bostic are due to participate in a conversation before the Technology-Enabled Disruption Conference: Uncertainty and Prospects for Disruptive Investments at 10:50 am ET.

At 11:05 am ET, San Francisco Federal Reserve President Mary Daly is scheduled to participate in a fireside chat before a National Association for Business Economics/Banque de France International Economic Symposium.